Question 1

If a monopolist produces to a point at which marginal revenue is less than marginal cost then

Accepted Answer

A)  the firm should increase output. 
B)  the firm should reduce output. 
C)  the firm is maximizing profits. 
D)  we do not know if the firm should increase or reduce without more information. 
A)  the firm should increase output. 
B)  the firm should reduce output. 
C)  the firm is maximizing profits. 
D)  we do not know if the firm should increase or reduce without more information.

Question 2

Which of the following is NOT an example of price discrimination?

Accepted Answer

A)  Gasoline stations charge more for gasoline with higher octane and additional additives. 
B)  Colleges give some students more financial aid than they do other students. 
C)  Airlines charge more for people who don't stay over a Saturday night. 
D)  College bookstore gives a price discount to faculty. 
A)  Gasoline stations charge more for gasoline with higher octane and additional additives. 
B)  Colleges give some students more financial aid than they do other students. 
C)  Airlines charge more for people who don't stay over a Saturday night. 
D)  College bookstore gives a price discount to faculty.

Question 3

-Refer to the above table. Given the demand and cost schedules, what is the profit maximizing quantity for this monopolist?

Accepted Answer

A)  23 
B)  21 
C)  20 
D)  24 
A)  23 
B)  21 
C)  20 
D)  24

Question 4

For a firm to be able to engage in price discrimination, it must

Accepted Answer

A)  face a downward sloping demand curve. 
B)  produce more than one product. 
C)  have customers of different levels of wealth and age. 
D)  have economies of scale. 
A)  face a downward sloping demand curve. 
B)  produce more than one product. 
C)  have customers of different levels of wealth and age. 
D)  have economies of scale.

Question 5

-Refer to the above table. Given the demand and cost schedules, what is the profit-maximizing price for this monopolist?

Accepted Answer

A)  $9 
B)  $12 
C)  $11 
D)  $10 
A)  $9 
B)  $12 
C)  $11 
D)  $10

Question 6

-Use the above figure. The profit-maximizing output will be

Accepted Answer

A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  None of the above are correct. 
A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  None of the above are correct.

Question 7

Price differentiation is a situation in which

Accepted Answer

A)  there are different prices for similar products reflecting differences in the marginal cost of providing the commodities to different groups of buyers. 
B)  there are different prices for the same product that are not due to differences in the marginal cost of providing the commodity to different groups of buyers. 
C)  consumers' comparison-shop. 
D)  the demand curve is vertical. 
A)  there are different prices for similar products reflecting differences in the marginal cost of providing the commodities to different groups of buyers. 
B)  there are different prices for the same product that are not due to differences in the marginal cost of providing the commodity to different groups of buyers. 
C)  consumers' comparison-shop. 
D)  the demand curve is vertical.

Question 8

A firm can be the sole supplier of a good and is still not a monopolist if

Accepted Answer

A)  the firm is not large. 
B)  the good produced is not important to the economy. 
C)  the firm is not making excessive profits. 
D)  there are very close substitutes for the good. 
A)  the firm is not large. 
B)  the good produced is not important to the economy. 
C)  the firm is not making excessive profits. 
D)  there are very close substitutes for the good.

Question 9

The profit-maximizing quantity of the monopolist compared to the perfectly competitive industry in the above figure are, respectively

Accepted Answer

A)  Q1 and Q2. 
B)  Q1 and Q3. 
C)  Q1 and Q5. 
D)  Q2 and Q3. 
A)  Q1 and Q2. 
B)  Q1 and Q3. 
C)  Q1 and Q5. 
D)  Q2 and Q3.

Question 10

Conclusions about the misallocation of resources under conditions of monopoly depend, in part, on the crucial assumption that

Accepted Answer

A)  monopolies are interested in economic profits and competitive firms are not. 
B)  the monopolization of a perfectly competitive industry does not change the cost structure of the industry. 
C)  the economies of scale exist only in perfectly competitive industries. 
D)  the marginal cost curve of a monopolist is different from that of a perfectly competitive firm. 
A)  monopolies are interested in economic profits and competitive firms are not. 
B)  the monopolization of a perfectly competitive industry does not change the cost structure of the industry. 
C)  the economies of scale exist only in perfectly competitive industries. 
D)  the marginal cost curve of a monopolist is different from that of a perfectly competitive firm.

Question 11

An important difference between a perfectly competitive firm and a monopolist is

Accepted Answer

A)  the size of the firms. 
B)  the shape of the demand curve each faces. 
C)  the goals of the owners of the firms. 
D)  a monopolist normally produces a service, while a perfect competitor normally produces a good. 
A)  the size of the firms. 
B)  the shape of the demand curve each faces. 
C)  the goals of the owners of the firms. 
D)  a monopolist normally produces a service, while a perfect competitor normally produces a good.

Question 12

To be able to engage in profit-maximizing price searching, a monopoly firm must be able to

Accepted Answer

A)  prevent the entry of other firms into the market for its product. 
B)  induce the entry of other firms into the market for its product. 
C)  avoid earning negative economic profits in the short run. 
D)  always earn zero economic profits. 
A)  prevent the entry of other firms into the market for its product. 
B)  induce the entry of other firms into the market for its product. 
C)  avoid earning negative economic profits in the short run. 
D)  always earn zero economic profits.

Question 13

Suppose that the profit maximizing level of output for the monopolist is 100 units, and ATC = $45.00; MC = $35.00; MR = $35.00; P = $45.00. What is the monopoly's profit?

Accepted Answer

A)  -$1000 
B)  $4500 
C)  $0 
D)  $3500 
A)  -$1000 
B)  $4500 
C)  $0 
D)  $3500

Question 14

The marginal revenue curve of a monopolist is

Accepted Answer

A)  downward sloping and below the demand curve. 
B)  downsloping and identical to the demand curve. 
C)  downsloping and above the demand curve. 
D)  horizontal and same as the market demand curve. 
A)  downward sloping and below the demand curve. 
B)  downsloping and identical to the demand curve. 
C)  downsloping and above the demand curve. 
D)  horizontal and same as the market demand curve.

Question 15

The price elasticity of demand for a good produced by a monopolist

Accepted Answer

A)  equals zero as long as the good has no close substitutes. 
B)  is always inelastic since the demand curve slopes down. 
C)  does not equal zero because there will always be some substitutes, however imperfect they may be. 
D)  does not equal zero because every good has at least one good substitute for it. 
A)  equals zero as long as the good has no close substitutes. 
B)  is always inelastic since the demand curve slopes down. 
C)  does not equal zero because there will always be some substitutes, however imperfect they may be. 
D)  does not equal zero because every good has at least one good substitute for it.

Question 16

Which of the following can be a barrier to entry, closing a market to new firms?

Accepted Answer

A)  an elastic industry demand curve 
B)  control of a vital resource by one producer 
C)  diseconomies of scale 
D)  ease of obtaining capital financing 
A)  an elastic industry demand curve 
B)  control of a vital resource by one producer 
C)  diseconomies of scale 
D)  ease of obtaining capital financing

Question 17

A firm can be the only firm in an industry and still not be a monopoly if

Accepted Answer

A)  the firm is not large. 
B)  the firm is not making economic profits. 
C)  the firm produces a good similar to a good in another industry. 
D)  the firm produces a good that is not considered a necessity. 
A)  the firm is not large. 
B)  the firm is not making economic profits. 
C)  the firm produces a good similar to a good in another industry. 
D)  the firm produces a good that is not considered a necessity.

Question 18

The demand curve facing a monopolist will be more elastic

Accepted Answer

A)  the greater is the number of substitute products. 
B)  as the consumers' need for the good increases. 
C)  the greater is the amount of fixed costs to cover. 
D)  as the number of consumers increases. 
A)  the greater is the number of substitute products. 
B)  as the consumers' need for the good increases. 
C)  the greater is the amount of fixed costs to cover. 
D)  as the number of consumers increases.

Question 19

A monopolist finds the output (Q*) rate that maximizes profit. It finds the price by

Accepted Answer

A)  taking the height of the marginal revenue curve at output rate Q*. 
B)  taking the height of the marginal cost curve at output rate Q*. 
C)  taking the height of the demand curve at output rate Q*. 
D)  setting price equal to marginal cost. 
A)  taking the height of the marginal revenue curve at output rate Q*. 
B)  taking the height of the marginal cost curve at output rate Q*. 
C)  taking the height of the demand curve at output rate Q*. 
D)  setting price equal to marginal cost.

Question 20

For a monopolist, marginal revenue is always

Accepted Answer

A)  greater than price. 
B)  equal to price. 
C)  equal to zero. 
D)  less than price. 
A)  greater than price. 
B)  equal to price. 
C)  equal to zero. 
D)  less than price.

Exam 24: Monopoly

If a monopolist produces to a point at which marginal revenue is less than marginal cost then

Which of the following is NOT an example of price discrimination?

-Refer to the above table. Given the demand and cost schedules, what is the profit maximizing quantity for this monopolist?

For a firm to be able to engage in price discrimination, it must

-Refer to the above table. Given the demand and cost schedules, what is the profit-maximizing price for this monopolist?

-Use the above figure. The profit-maximizing output will be

Price differentiation is a situation in which

A firm can be the sole supplier of a good and is still not a monopolist if

The profit-maximizing quantity of the monopolist compared to the perfectly competitive industry in the above figure are, respectively

Conclusions about the misallocation of resources under conditions of monopoly depend, in part, on the crucial assumption that

An important difference between a perfectly competitive firm and a monopolist is

To be able to engage in profit-maximizing price searching, a monopoly firm must be able to

Suppose that the profit maximizing level of output for the monopolist is 100 units, and ATC = $45.00; MC = $35.00; MR = $35.00; P = $45.00. What is the monopoly's profit?

The marginal revenue curve of a monopolist is

The price elasticity of demand for a good produced by a monopolist

Which of the following can be a barrier to entry, closing a market to new firms?

A firm can be the only firm in an industry and still not be a monopoly if

The demand curve facing a monopolist will be more elastic

A monopolist finds the output (Q*) rate that maximizes profit. It finds the price by

For a monopolist, marginal revenue is always

The Nature of Economics

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